The Recovery of Hong Kong } 585
use such means. Instead, it acquiesced in British colonial rule, even while
denouncing it via frequently strident propaganda.
Throughout the pre-1978 period, Chinese leaders sidestepped the issue of
Hong Kong. The issue of Hong Kong’s reversion was forced onto Beijing’s
agenda by the expiration date of the 1898 ninety-nine year lease: July 1, 1997.
Many real estate leases and mortgages in Hong Kong were written for a term
of fifteen years. Fifteen years from mid-1997 was mid-1982. Sino-British talks
over Hong Kong’s reversion had been underway without result for several
years, and as the mid-1982 date came and went without any progress, uncer-
tainty in Hong Kong began to mount. The danger of a flight of capital and
human talent was quite real. Hong Kong residents kept an unusually large
portion of their assets in liquid form (cash, gold, negotiable securities) because
they feared it might become necessary to flee in a hurry. Hong Kong’s com-
pletely open capital accounts and convertible currency made it easy to move
money into or out of the city. Many Hong Kong residents had relatives in other
countries, especially English-speaking Commonwealth countries—Canada,
Australia, New Zealand, and Britain—with relatively open immigration poli-
cies. Many Hong Kong businessmen had wide contacts and business inter-
ests outside of Hong Kong, and could easily use those to emigrate. As 1997
approached, many Hong Kongers began to acquire foreign passports or resi-
dent permits, purchase homes abroad, and settle family members there, all in
preparation for potential flight. A large portion of Hong Kong’s population
had already fled CCP rule once (in the 1950s through the 1970s), and many
were psychologically prepared to flee again if it came to again enduring CCP
rule. As July 1, 1997, drew nearer without any British-Chinese agreement or
clarification of the future of Hong Kong, anxiety mounted.
CCP leaders were in a difficult situation. The completion of China’s
“national liberation” and extirpation of China’s “national humiliation” re-
quired reversion of Hong Kong to PRC administration. Yet reversion seriously
threatened the important role Hong Kong played in PRC economic develop-
ment. A leader less confident than Deng Xiaoping might have acquiesced to
a residual British role in Hong Kong to reassure opinion there—as London
initially insisted. A leader more ideologically minded than Deng Xiaoping
might have been unwilling to countenance continuation of a capitalist eco-
nomic and liberal political system in Hong Kong. In the event, however, Deng
Xiaoping was able to navigate the shoals with remarkable success.
Sino-British interactions over Hong Kong began in 1978 with the appoint-
ment of Percy Cradock as British ambassador to China. Cradock had served
as chargé d’affaires at the British mission in Beijing during the Cultural
Revolution and had considerable sympathy for the reform effort of Deng
Xiaoping’s leadership. Cradock helped arrange the first ever visit to Beijing by
a serving British governor of Hong Kong, then Murray MacLehose, in 1979.
During the visit, MacLehose proposed in talks with MFA representatives that